Warren Buffett's Berkshire Hathaway Inc. has executed a substantial sell-off of Bank of America (BofA) stock, with recent transactions totaling approximately $982 million. The sales, which occurred between August 23 and August 27, reflect a broader strategy of divesting from the banking sector. The moves, disclosed in a regulatory filing on Tuesday, are part of a larger trend of reducing Berkshire Hathaway's stake in the second-largest bank in the U.S.
Since mid-July, Berkshire Hathaway has trimmed its holdings in Bank of America by $5.4 billion, equating to a near 13% reduction in its interest in the bank. The firm's remaining shareholding stands at approximately 903.9 million shares. Despite this reduction, Berkshire remains the largest shareholder in Bank of America, holding a stake worth around $35.85 billion based on Tuesday's closing price.
The recent sales come on the heels of another significant shift in Berkshire's portfolio: a notable reduction in its investment in Apple Inc. Earlier in August, Berkshire disclosed a nearly 50% cut in its equity investment in Apple, with the fair value of its shares dropping from $135.4 billion in Q1 to $84.2 billion at the end of Q2. This reduction underscores Buffett's evolving investment strategy as the firm reallocates resources.
Bank of America's shares experienced a slight decline of 0.15% in pre-market trading following the latest disclosure. Over the past month, the bank's stock has fallen by 4.8%, in contrast to a modest 1.7% decline in the KBW Bank Index. The broader market conditions and investor sentiment around financial stocks may be contributing factors to this downward trend.
Buffett's initial investment in Bank of America dates back to 2011, when Berkshire Hathaway acquired $5 billion worth of preferred stock in the bank. This investment came during a period of uncertainty about Bank of America's capital requirements, a time when the bank was facing significant challenges. The move was seen as a vote of confidence from one of the most respected investors in the world.
Despite the recent sell-off, Buffett has previously praised Bank of America and its CEO, Brian Moynihan. In April 2023, Buffett expressed strong support for Moynihan, stating, "I like Brian Moynihan enormously. I don't want to sell it." The latest reduction in Berkshire's stake represents a notable shift from this earlier sentiment, reflecting a strategic rebalancing rather than a loss of confidence in the bank's leadership.
Berkshire Hathaway's cash reserves have reached a record high of $276.94 billion as of the end of Q2, up from $188.99 billion at the end of March. This substantial cash pile indicates Buffett's cautious approach amid a volatile market environment, positioning the firm to capitalize on future investment opportunities.
